Home/Business/ Rupee falls further, now hits 72.66 per United States dollar

Rupee falls further, now hits 72.66 per United States dollar

Leticia Stanley |Tuesday, September 11, 2018

Indian two thousand and five hundred rupee banknotes are arranged for

New day, new low.

Extending its free fall, the rupee weakened further to hit a fresh low of 72.64 against the USA dollar, falling 91 paise in late morning trade today on rising crude oil prices, strengthening dollar and a widened current account deficit.

Emerging markets have been roughed up in the past month as contagion fears start to spread following a meltdown in the currencies of Argentina and Turkey.

However, the RBI wasn't seen actively intervening in the foreign exchange markets as it did on Friday. "I don't anticipate the rupee to touch 21 against the dirham", he said.

"The rupee is widely traded under non-deliverable forwards, which has assisted in the slide of the currency".

A report by worldwide credit rating agency Moody's Investors Service mentioned that sustained weakening of the rupee was "credit negative" for Indian companies that rely on U.S. dollar debt to fund their operations but generate revenue in rupees.

Opposition parties observed a shutdown on Monday to protest against the rise in fuel prices and decline in rupee's value.

Meanwhile, global rating agency Moody's Investors Service has said that a sustained weakening of the rupee would be credit negative for rated Indian companies, Business Standard reported.

The Reserve Bank of India and its peers in other emerging economies have been forced to defend their currencies in the wake of a confluence of dollar-supportive events.

According to a data released by RBI on Friday, India's current account deficit (CAD) widened to $15.8 billion in April-June in value terms this year as against $15 billion in the same quarter of 2017-18, mainly due to a higher trade deficit.

The current-account shortfall represented 2.4 per cent of gross domestic product, more than January-March's 1.9 per cent of GDP, according to the Reserve Bank of India.

India on Monday announced plan to tap its citizens overseas to improve remittances inflow.

The rupee has depreciated 14.13 per cent year-to-date against the UAE dirham.

With five of the seven already in a currency crisis or a programme run by the International Monetary Fund that leaves South Africa and Pakistan as the standouts, it said.

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